UM study: Medicaid expansion an economic powerhouse for Montana

Bryce Ward, who studies health care for the Bureau of Business and Economic Research, said Medicaid expansion has a positive fiscal impact on the state budget by reducing state spending in some areas. (Martin Kidston/Missoula Current)

Medicaid expansion has brought $350 million to $400 million in new money to Montana’s economy, including 5,000 jobs and $280 million in personal income per year, a University of Montana economist told a legislative committee Thursday.

The state’s expanded Medicaid program insures 94,000 Montanans.

Bryce Ward and Brandon Bridge from UM’s Bureau of Business and Economic Research studied the economic impact of Medicaid expansion in Montana.

Ward reported the findings Thursday to the Legislature’s Medicaid Expansion Oversight Committee.

Part of the Affordable Care Act, expanded Medicaid coverage is open to childless adults who earn up to $16,600 a year for a single person, or $22,400 for a couple.

Ward said the economic impact is a boon to Montana’s economy.

The study estimated that about 2,000 of the new jobs created by Medicaid expansion are – as you’d expect – in the health-care industry. But the remaining 3,000 new jobs are scattered throughout retail, construction and the hospitality industry.

That’s because those newly insured Montanans not only saw their health improve, but their ability to work.

Thus his finding that Medicaid expansion (and the associated HELP-Link program) appears to have led to a 6 percent to 9 percent increase in labor force participation among low-income Montanans (ages 18-64).

In addition, Medicaid expansion has a positive fiscal impact on the state budget by reducing state spending in some areas (e.g., traditional Medicaid).

It also increases economic activity and, as such, increases state revenue, the report said. Combined, the savings and increased revenues are sufficient to more than cover the Montana’s share of Medicaid expansion costs (10 percent in 2020 and beyond).

Currently, the federal government pays about 95 percent of the costs now, but will lower that level to 90 percent by 2020. The state pays the remainder, or about $100 million in 2020, by Ward’s estimate.

Savings and revenue gains associated with Medicaid expansion will more than offset those expenses – with Ward predicting a net gain of $55 million to the state budget.

Montana’s expanded Medicaid program will expire in July 2019 unless the 2019 Legislature extends it. That’s the reason for the oversight committee that met Thursday.

Ward said researchers have studied the effects of Medicaid expansion in other states, with these conclusions:

  • Medicaid expansion improves health outcomes among the eligible population
  • It improves financial health – reducing outstanding debt, reducing bankruptcy and improving credit scores.
  • It reduces property and violent crime.